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Obamacare’s Complexity is Not Designed to Fool People

Obamacare’s complexity is really driven by the complexity of our present health care system—and the preferences of the American people

In a fantastic piece Megan McArdle exhorted journalists, who need both expert knowledge and insider connections to do their job, to nonetheless represent their non-expert, outsider readers. Taking Grubergate as her ostensible peg, she listed various Affordable Care Act complexities that are meant to hide what’s really going on. For example, we have the Cadillac tax, rather than just limits on the tax subsidy to employer-provided insurance.

But McArdle goes wrong when she claims that deliberate attempts to obscure are the main drivers of Obamacare’s complexity:

“Obamacare was designed—as many laws now are—to exploit [ordinary people’s] lack of understanding. It is huge and complex for a reason, and that reason is that this complexity is an effective thicket in which to hide what you are doing.”

The desire to obscure, though real, is only responsible for a tiny share of Obamacare’s complexity. The dominant cause is the complexity of our pre-ACA health care system. The second main cause is giving Americans what they want from health care—like the lowest possible cost to government. That’s really the opposite of what McArdle claims.

During the debate over the ACA, before it was called Obamacare, Jonathan Cohn at The New Republic published a map of our health care system. He wanted to help readers sort the complexity of our present system from the complexity of potential legislation. As he said of the map, “it’s not a pretty picture.” To put Obamacare’s complexity in context, I suggest this exercise that I give my students: on the health care system map, draw what the ACA changes or adds. You’ll soon see how little Obamacare adds or disrupts to the existing complexity. Anything that interacts with such a complex “system”—phenomenon really—is itself inevitably complex.

The second main reason Obamacare is so complicated is the opposite of what McArdle suggests. Obamacare’s complexity comes from giving ordinary Americans what they say they want—limited government, no universal handouts, limited taxes, the private sector and choice. Sherry Glied, an Assistant Secretary in Health and Human Services from 2010 to 2012, speaking at an APPAM symposium earlier this month, described what implementing the law involved and why:

“The policy… was really designed to fit the budget envelope that was available… The entire legislation is structured to minimize crowd-out and stretch the fixed Federal dollars as far as you can. So what does that do?

It means you have incredibly complicated rules for who gets into the exchanges and what coverage they get. If your income is less than 400% of poverty, you need to be given choices on the website that depend on your income, whether you’re eligible for this program or not, whether you’re eligible for any other program, including employer sponsored insurance, what the benchmark second-lowest cost silver plan in your rating area is, and the premiums for you or your family, which depend on age, for all the other plans in your rating area.” (Link registration required; 11 minutes)

In other words, the ACA is complicated because it preserves employer-provided insurance and minimizes government spending. Rather than pulling the wool over Americans’ eyes, Obamacare took Americans at their words and gave them what they said they wanted. The political process worked.

Of course, Americans didn’t know that what they wanted would produce such unwanted complexity, which comes with big price tags. One price is all the time and effort it takes everyone to figure things out. We have all heard the stories: busy phone lines, web sites and navigators; endless forms; wrong information and different bits of the bureaucracy that don’t communicate. A further price comes from complexity-driven mistakes, like bad plan choices.

Complexity ends up penalizing politicians doing anything with health care. As Paul Hughes-Cromwick tweeted, “Fundamental Obamacare problem: Will always be huge defects in $3T+ mixed HC system. But now they’re ALL O’Care problems no matter genesis!” If a politician touches the health care system, it seems he owns it.

At the same APPAM symposium, Hiedi Allen told the story of her father, a lifelong Republican who lost his business during the Great Recession. Uninsured, he sought her help to become insured. He was almost ready to credit the Democrats with a useful policy and meet his daughter’s condition of being photographed with a sign saying “I love Obamacare.” But the once successful business owner had too little income for the exchanges and his state of Idaho had not expanded Medicaid. In the end, he blamed Obama and the Democrats, saying they just didn’t like working people. (59 minutes)

Complexity also makes it hard to recognize successes. Glied described the long list of difficult things that HHS had to implement that worked: loss ratio regulations, rate reviews, insurers participating… Almost all unheralded because people didn’t know about such endeavors or didn’t know the how hard they were to implement.

And, of course, complexity is at the heart of the problems McArdle describes: The ease with which insiders, including politicians, can obscure what they’re doing. Another symposium speaker, Judge Aaron Ezekiel, echoed McArdle’s frustration with politicians deliberately causing complexity but (implicitly) saw it as coming from conservatives aiming undermine the reform:

“This is the result of the usual kind of terrifically ill-advised political compromise… The reality is that if you want to pass any political law, this was the best that you were going to get. It’s designed to make it hard to implement. It’s designed to make people who fall under it feel badly about the law, about the plans, about the exchange, about the terrible number of bureaucrats involved. It is simply designed to be complicated and to be demeaning.” (32 minutes)

There may be some truth to that too. But Obamacare’s complexity is not mostly about politicians—of any political stripe—trying to fool Americans. To the extent the ACA had any effect on our health care system’s complexity, the effect comes from respecting Americans’ wishes.

One thought on “Obamacare’s Complexity is Not Designed to Fool People”

Great analysis. But isn’t it also true that much of the complexity come from the political opposition to simplification. A “public” option was excluded because of opposition from Rs and very few D’s. To me, this was highlighted by the comment that “Its impossible to get a bill with the public option through the senate, and impossible to get one through the House without one. [reconstructed quote]” I am not sure this is giving Americans what they want, rather than stopping them getting what major interests do not want them to have. How would a single payer system do in a referendum (with equal advertising budgets on both sides)?

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Dahlia Remler is Professor at the School of Public Affairs, Baruch College, City University of New York and the Department of Economics, Graduate Center, City University of New York. She is also a Research Associate at the National Bureau of Economic Research. Read more...